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X-INEFFICIENCY: Cost that is higher than it needs to be because a firm is operating inefficiently. This is most often seen for firms that have a great deal of market control, especially monopoly. The lack of competition allows a business to pad it's expenses, hire unneeded employees (like relatives), goof off instead of working, and all sorts of other things that lessen production and increase cost. The business is not penalized for these actions, because market control allows the company to extract whatever price is needed to cover cost.
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Lesson 10: Gross Domestic Product | Unit 3: Two Views of GDP
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Page: 14 of 25
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Topic:
Demand and Supply
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GDP can be measured in two different ways.- Demand-side: In a market transaction, the buyer pays a price for a good or a service based on the value of the good. This indicates that the value of GDP can be measured from expenditures.
- Supply-side: For seller's, the revenue received from selling a good is used to pay resources--the cost of production. This indicates that the value of GDP can be measured by the resource cost of production.
- These two sides--expenditures and resources--give us two ways of measuring GDP.
- Each can be used to check the other.
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RATIONAL BEHAVIOR The notion that people make decisions based on the desire to obtain the greatest amount of satisfaction. Rational behavior essentially means that people prefer more to less. The presumption of rational behavior underlies most economic analysis, especially that applied to consumer demand theory.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors wanting to buy either clothing for your kitty cats or a set of luggage without wheels. Be on the lookout for slow moving vehicles with darkened windows.
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This isn't me! What am I?
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The first paper currency used in North America was pasteboard playing cards "temporarily" authorized as money by the colonial governor of French Canada, awaiting "real money" from France.
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"The only place success comes before work is in the dictionary. " -- Vince Lombardi
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PPI
Producer Price Index
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